lone dissenter for awhile, do the doves on the committee, are they secretly or not so secretly glad that he's there to help put their own views into context? >> you know, it's interesting. i think so. i think that it's all a process. and you know, we interview everybody. we interview the doves, the hawks, the centrists and that's how you sort of come to a conclusion with the forward guidance from the fed. and you listen to the discenters to see how far over is he? how far apart are they? i think lacquer makes some good arguments that bear listening to. >> yeah, great stuff, steve. safe travels home. >> thanks, carl. >> steve liesman. that does it for us here. let's get to headquarters, wopner and the fast money "halftime." >> welcome to the "halftime report." four hours to go until the close. take a look at green arrows across the board. the dow getting a bit of a lift in the last 15 minutes on word that the president and the

speaker are meeting on the fiscal cliff at the white house, right now. here's what we're also following on "halftime." guarding your money. what's the best way to protect yourself from the fiscal cliff? vanguard ceo will tell you in a "halftime" exclusive. debate it, caterpillar has underperformed the market this year but with china looking up is the stock set for a surge? the "halftime" rumble is ahead. first our top story, biting into apple. citi downgrades the stock less than one month after calling it a buy. what does the firm's team of analysts see now? where will the stock head for header? traders are stephanie link, joe terranova, steve weiss and josh brown. you surprised at this downgrade? what does it mean for the stock which went under $500 a share today previously in the premarket? >> this is 20 days after initiating coverage of the buy. i guess i don't know which of the three of them was the most vociferous about downgrading because now it's three guys making the call. playbook one of them holds a

little bit more sway. personally i really don't care. i don't think it's optionable, the initiation at the price it was at and now the call today. the way we're looking at apple, it's an oversold name. things that are not intonal to the business that are causing it. the stock looks like it could probably shrug off the latest downgrade from citi if only it looks from all of the pessimism about china might have been a little bit overdone. >> weiss, at what point do you see enough that's being hit in this stock that you step back and say you know what? maybe it's not going to have that quick turnaround that apple bulls think it will. >> here's the deal. even though they downgrade the stock, they still see 15% upside and minimal downside. >> i'll take that. >> that's a total return. in this environment, 15% upside target is pretty good. i think apple is still going through a period, they've ratcheted up sort of the conversation around the quarter that comes out on january 22nd. as i said, i like it lon-term

still. i don't own it. i just want to get through all this controversy, i'm willing to pay up for it. but let's face competition coming into the market. my only question is, so we've heard two calls on apple now from citi. we've got to hear the third call. maybe that's in another 20 days. >> joe, you have traded apple, more actively than probably anybody who's a regular on this show. as a trader. when you look at a downgrade here, what do you think? >> well, i look at the beginning of the year and look at where the analysts were, they were at 500 bucks. as we approached the highs for a year the analyst price targets moved to their highest level. so i am focusing on the content value of what i'm doing in terms of trading this. and kudos to pete najarian who has said do nothing. my characterization of calling this a generational low was absolutely wrong. however i have sold over the last two weeks in quarter increments half my position. i am waiting and expecting that we are going to get favorable

results in january. the second derivative plays off of how many iphones are sold. whether it be cirrus, qualcomm, skyworks solution are all doing well today. qualcomm got defended over first so the iphone story really is not that muted. i'm sitting back, i'm waiting, i'm long. to me the answer to your question comes in january. >> stephanie link? >> citi is talking about supply chain cuts for the iphone. but we also know that apple increased production 45% to 50% and as the yields get easier, as it gets easier to get this stuff i think it's interesting. we could see some cuts. just because they increased production from october to december. so this might be semantics. at the end of the day, we sold it about 584, so i think it's a trading range stock. i've said it. i think the low 500 is very interesting particularly given the china news, given the 50 new countries that they're in. i just don't see this getting resolved until you get to january 22nd which is when the company reports earnings and we get a better read on gross

margins, on products yields and all of this noise. >> glen young is the analyst who cut the stock today, slashed its price target. glen, welcome back to "halftime" >> thanks. >> help us understand how three weeks ago you came on the show, initiated coverage with a buy. you've seen enough in that period of time to change to a neutral. what happened? >> remember when we initiated the call wasn't especially positive. our view was we're looking for a short-term rally in apple shares. one because we felt the stock had pulled back substantially and two we felt the data point on iphone 5 would be strong and durable. based on meetings that we had in taiwan last week, talking to the supply chain, releasing some indications of cuts and i'll admit that the reasons for those cuts are a little unclear at this point. it does, we think, divert attention away from the strength of iphone 5, and refocus on the risks in the apple story that we highlighted when we initiated

just three weeks ago. >> you had discussions with suppliers over in asia, took the data and cut iphone 5 estimates by 20 million units for fiscal year end. correct? >> that's right. >> on the flip side of that, however, you're keeping your fourth quarter outlook for iphone intact. how do those mesh together? one seems to be a negative view. one seems to be a positive view. where does it come down to? >> one seems to be negative, one seems to be neutral in the sense we're not changing our first quarter estimate. i characterize it as a bit more of a negative stance. >> how much of this has to do simply nothing more than sentiment has turned on a stock that everybody, including yourself and your colleagues over at citi have loved for so long, and it's hard to turn that tide once it's changed? well i don't know that it's a sentiment issue. for us it's a change in what we see on the one hand

fundamentally, on the other hand, there is some element of what i call refocus. i think the focus has been on the strength in apple. even in our initiation which granted was had a buy rating, anyone who read that note would say that you know our attention of largely focused on the risks in the name. and unfortunately without sort of clear path for iphone 5 strength, we think that the focus is on the risks again. >> glen, josh brown, i'm curious, is there a valuation level, assuming the business prospects didn't change and assuming you didn't hear any other additional chatter that may be cautious from the asian suppliers, is there a price level where you would go back to a bye, whether it's 450, 480, you tell me, or is it not really dependent on price necessarily but more about direction of growth? >> it's a bit of both, to be fair. if you recall from the initiation we did an analysis that suggested when apple was at

490 you're looking at a stock that reflects the metrics of other similar companies. so one could argue that's as low as the stock will end up going. and you know, we're not suggesting there's a downside because of that. on the other hand, is the stock going to meaningfully rise with all the uncertainty that overhangs it, not just with respect to data points that we're seeing in taiwan, but to rising competition, we see from samsung. we recently did some survey work that suggested consumer preference is growing, samsung products and probably related to this above four inch screens that we can create some risks to apple's position with its current product offering. >> after you put out your report yesterday, and i saw it just as we came out, apple came out and said they old sold 2 million iphones in the first three days. >> in china. >> in china. with the second tier tellco player in china. they don't seen have to deal with the primary telco player which is china mobile. >> i'm going to fill in the

blanks as we go. >> i feel like marvin lewis here. i guess i'm the straight guy again. in any event when they launch the iphone 5 more broadly they had 3 million units sold over a period of five days in multiple countries. here we are in one country. so the question is, number one, that couldn't have been your estimates, because apple didn't tell you that, and in your reanalysis, and number two, if they do sign the deal with china mobile, what's that do to your estimates and your outlook on the stock? >> so two things. one, yes, i think that 2 million unit number is good, and i think the language apple uses in the press release makes that very clear. with respect to china mobile, you have to look at it a couple of ways. apple already sells units on the china mobile network, just not officially through the network. people who are subscribers of china mobile already buy iphones, i think that's very clear in china mobile's numbers. you're really talking the increment above that should they sign up china mobile.

it's meaningful. they could theoretically have a lot of upside. we our firm doesn't believe that's going to happen until second half '13 and until we see something new either from apple or something less new from its competitors, again we think the stock may remain. >> appreciate you so much coming on the show to talk about apple today. look forward to having you back. >> thanks. >> glen young from citi. may have seen the headline at the bottom of your screen that that meeting between the president and the speaker of the house has concluded at the white house. let's get right down to washington and our own eamon javers with the very latest on the fiscal cliff negotiations. what do we know? >> we know that the meeting lasted about 45 minutes between the speaker and the president over at the white house. we know that it was a surprise meeting, what we don't know is what they talked about in that meeting. but in about 20, 25 minutes we expect to have a briefing from white house press secretary jay carney and you can imagine that reporters are going to be after him to give us some of the details here of what was said in this meeting. clearly now we're having a sort of regular stream of

conversation between the speaker and the president. we saw the meeting on thursday. a phone call on friday with an offer from john boehner to go up to $1 trillion in new tax revenue, and including increasing tax rates on those people who are making $1 million or more a year. so, progress in these negotiations is clearly a very moving target right now. and at the bottom of this half hour we'll try to get some more information out of the white house on what exactly transpired in the meeting that has now ended. as we know lasted about 45 minutes according to both sides. >> eamon, the stock market seems to be placing a bet right now that the conversation at the very least may have moved the ball forward even further. we're at the highs of the day right now and the stock market did spike up when it learned that the president and the speaker were meeting. is it accurate that read that the market is giving us right now? >> yeah, i think that's right. i mean i think if you're looking at sort of likelihoods here, percentage of odds of getting a deal were definitely getting closer to getting a zeal here. now the trick here is for the speaker of the house. can he offer these things to the

president and be confident that he's got his caucus with him? from everything that we hear boehner is in a pretty solid leadership position right now and he does have the backing after at least enough republicans on capitol hill to do this deal with the president, but he's going out pretty far on a limb here by offering tax rate increases which is something that he said he does not want to see. now we're going to have to wait and see what the president is offering him in exchange for that. the theory here is that boehner, the speaker, has to be able to come back in the white house and tell his fellow republicans on capitol hill that he got something good that they want in this negotiation from the president. maybe that happened today. we're just going to have to wait and find out. >> eamon, thanks so much. down in d.c. investors are getting at least something out of those talks. that's a pretty good gain on wall street right now. the s&p and nasdaq good for almost a 1% gain. you're looking at the you do with two-thirds of 1% rise. guys, maybe the ball is being moved forward on the fiscal cliff. that would get one big thing out

of the way. >> i think you have to begin to expect that the market is pricing in that something's going to get done. that's a little problematic because the sustainability of an appreciation on a deal is going to need something more than fundamentals, so we may be setting up for something that's a sell the news type of event. once we get it. >> that's a mike santoli. >> i've got to disagree. we had mike on the show last week. i get his point. i understand what joe is saying too. i don't think based on fund flows, based on participation. based on net long positions in the asset management, i don't think any of this is pricing in an actual deal yet. and i got to tell you, i can't picture a sell the news reaction if this happens before the end of the year. i think it's got to be positive. >> and i'm wrong, josh is right if we get fund floes out of fixed income. >> buy the news. >> all right make that the last word on that segment. appaloosa's david tepper now famous for his qe-2 rally call

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>> listen with these interest

rates, with these fed, yes, of course it's cheap. but you still have the stuff in washington that's holding back everybody and everything. the question is how much does it mean and what will it do when you're holding back people from the end of the year because if it does blow up the market will probably go down 2% or 3%. >> that was david tepper earlier this morning on "squawk box" discussing his call on the market if we go off the cliff. he also taubed a lot if we don't go off the cliff, what could happen. he said in his words stock looks cheap relative to a rich bond market. you agree with tepper? >> absolutely. we were just talking about at the commercial is it's not just here in the u.s. there are things that are getting better internationally. china we talked about for several months now. i think europe the data points are getting no worse. i think that could be source for upside for 2013. imagine if you get this unknown here in the states plus all of this global liquidity. i think it's very powerful and positive. >> steve weiss, tepper whom i know that you know well says the obvious.

in that d.c. could screw it all up for the near term but says the fed's still there, our economy is improving. you've got the ecb with his words a put under the market as well. >> the only place i won't agree with dave is on the golf course. because i know i'm a better player than he is. in terms of the market, he's been laying it out this way for awhile. let's face it, aside from renaissance technology, he has the best long-term track record of any fund manager out there. not just hedge funds but i generally defer to genius like that. that means he gives me a few more strokes the next time we play. >> i know it's painful for you. >> it's very painful. you're flush with liquidity. the issues continue to be, and i think one of the things, they may be worried about next year, is europe. which is a little slower than it should be. but viewers should overcome that. he focused on and what we do

focus on is housing and autos which have indications of consumer strength. that's going to continue because we're still a consumer letdown. >> the one thing about europe, steve to your point, while it's obviously a concern, what we did mention is the fact that there is this put out there in the form of rates being lowered at the ecb which they agreed to, haven't done yet, and it's very reminiscent of what he talked about in 2010 which is one of two things are going to happen, either employment picks up and the economy improves or the fed is going to come in. this is a very reminiscent situation this time with europe. >> give me a tepper trade then. what's the tepper trade if you think we may go down 2% to 3% if the fiscal cliff -- but then the market goes up -- >> the obvious trade is cyclicals, high date today. smaller cap versus larger cap. stocks trading below the 200-day moving average. >> would you agree with him that's how you play. >> you're saying to the viewer right now, buy the s&p because

you're good. >> yeah, because he was talking about how fully valued the credit market is. he's a credit guy first and foremost. buy stocks. >> i think we're at a point in the cycle where we can no longer dismiss the fact that folks could be rewarded for being in fixed income and being in equities. buy the s&p, okay, fine, as long as we get flows out of fixed income. if we don't, then i don't think you buy the s&p. it has to happen this time. >> i got to run, steph, give me a tepper trade? >> i think the commodities continue to do well. i think iron ore continues to do well. actually, still underowned and underappreciated. >> let's go to the market flash desk. pri brian shactman what are you watching? >> mostly green. jcpenney down. last week it's up 10%. last month up 25%. still year to date down about 42%. pretty healthy volume on the name to date. back to you. >> jcp did a lot of that 25%, i think, last week. i mean they had a huge week.

>> it's all in context because if you look at that stock over twelve months, still got a lot more ground to cover. but sometimes there's no one left to tell. i try to explain this a lot on the show. >> can you -- >> very similar. you've got a shareholder base that has totally given up on the name huge short positions in these stocks, 30%, 40%. then at a certain point, the people in it, they're just not going anywhere. there's nobody left to sell. sometimes -- 40d on. sometimes that presages a fundamental turn. in the case of jcpenney i think it's just a situation where people don't want to be as short the name as they were. valuation has gotten a little bit more pollatable and maybe some longer-term people coming in. i don't think there's a fundamental -- >> valuation jcpenney -- >> people are willing to make that bet. >> i fear sales are still running down 30%. >> which is surprising

considering that they've actually -- >> it's a short -- >> the reason the stock rallied last week because people thought with the family and friends discount they were getting more aggressive of trying to get traffic in the stores. if you get traffic you have less of a burden on the cash balance. >> assuming you're making money. they were justing anywhere. and they gave it away for 20% less. >> if you get traffic in the stores that stock is going much higher. >> imenjoying this. >> you're recommending it high -- >> no. >> i think it's sort of -- long templ -- >> last week at 1 and change it was interesting just because of the aggressive promotion that they were doing which i think would help traffic. >> would you short it here? >> here's the thing. there's no news. the company hasn't talked. they give no guidance until the quarters. i'm telling you not now. i covered my short. >> well that's -- >> that's not what i'm asking.

>> right from the quarter. >> all right. let's hit the biggest pops and drops right now in midday trading. caribou coffee is getting a pop about 30%. >> take out of 16. i kind of value it at 19. it was a good price. i would probably take profits. >> josh, hpq is dropping today, that's hewlett-packard. >> there's some chatter from deutsche bank analyst that it's not a good idea to be pushing for a wreakup. i tend to agree. joe,y compuwear? >> i think the real trade is who potentially gets a rebound on the back of it. red hat potentially even if a deal doesn't get done there's enough that's been declining that it's going to be reversed. >> weiss, jet blue. >> here's the deal, the airlines have been consolidating, their prices are holding well. i still think you can own the airlines whether it's jetblue, southwest, us airways.

>> airlines trading at 52 week high as a group today. you saw jetblue shares up better than 3%. a pop for the mcrib. it's back. it's a big day in america after a long and hungering wait. mcdonald's storied sandwich rejoins the menu today and just in time for christmas. the mcrib which isn't a rib at all packs a whopping 26 grams of fat, nearly 1,000 milligrams of sodium, and with its dlied release the restaurant chain is hoping the snack will beef up its fourth quarter numbers. >> it's not a rib, what is it? >> i don't even know what i'm saying. >> a fish? >> i don't -- >> i'm not going through mcdonald's and i still don't like the stock. i traded le- >> coming up on "halftime" from a wireless giant to a health care play we've got your top three trades. could a fiscal deal change the treasury trade with only 14 days left, making a pit stop to find out where yields are headed next. we'll be right back. look, if you have copd like me,

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ask your doctor about spiriva. welcome back. it's time now for our top three trades. first up on the list is splint. the company says it will guy the remaining 48% of clearwire that it doesn't already own. $2.97 a share. that vool yous clearwire at about $10 a year. stephanie link this is the worst kept secret on wall street. faber broke this news about a week ago. >> the company is doing all the right things. they needed the sprek tum to build out lte. they're also closing their network. they're going to have synergies from this deal and i think at four times ebitda the stock is certainly not that expensive. on a pullback i like the story.

>> tenet health care trading at levels not seen since october 2006. it's almost up 3%. >> the reason is it was a completely different company back in 2006. it was back. the company may have gone out bankrupt so it's been a complete he will coverry in it and they do very, very well under obama care in this hospitals and acute hospitals. >> all right, finally cheniere energy is up. joey t. what's the read? >> it's a 20-year deal in 2018. there's two names that could play off of this. there is lng, which is chenniere, and also cqp which is cheniere partners. overall it's going to be a big theme here domestically in the u.s. cheniere is a pioneer in that. >> bond yields are moving higher

today after news that speaker boehner proposed a counteroffer to avert the fiscal cliff. but with fields on the ten year still sitting below 1.75%, does the path of least resistance point higher? let's go to jackie deangelis the host of cnbc.com's futures now. >> good afternoon scott. don't look now but over the past two weeks, bond yields have made a massive run higher. remember as bond prices fall the yields rise. so if we do get a deal on the fiscal cliff, is it worse for bonds yet to come? anthony is at the nymex and jeff is at the nasdaq. jeff a fiscal cliff deal would be good for stocks but how big of a danger would be it for bonds? >> jackie, we are seeing these treasury prices down like you said and the yields rise. but if we do get that fiscal cliff, specifically the long end of the curve, the ten year, the 30 year can really let out and to joey t.'s point earlier, you see that rotation out of

trernries. should really boost the equities market. i think we've had a lot of clarity in the past week. the fed came out. they confirm they're focused on their purchases and the belly of the curve that four to six-year bucket. right now i'm focusing being short these treasury futures in the ten year as well as the 30 year and they're getting hit rhe pretty hard today. >> could we be seeing the beginning of an asset class rotation out of bonds and into stocks? >> yeah, i think you make a very good point. it wasn't only the fiscal cliff that brought yields so low on the bonds. if you look just look in july we had an unemployment rate in this country of 8.3%. china looked like a hard landing, europe a lot of uncertainty there. now europe looks slightly better. china looks like a soft landing and our unemployment rate is 7.75%. right now when i look at the ten-year march bond futures i see just trading below that 1.2320 area and if it settles below that that says yield will

trade above that 1.75 area possibly hit 1.8, 1.9. >> you have a question? >> looks like you agree. anthony? >> yes. >> tepper says the parkt is rich. it sounds like you agree. >> yeah, i absolutely do agree with that. absolutely. i think that with economies improving, things like that, the safety or the safe haven look comes out of bonds, into the risk on assets, equity markets. >> all right. now you know how our guys are playing the fiscal cliff. would you rather buy bonds or stocks right now? logon and vote in our poll. we'll give you those results on our online show tomorrow. scott back over to you. >> all right, jackie, thanks so much. up on "halftime," only eight full trading days before the fiscal cliff deadline. if we don't get a deal investors may need to take cover. vanguard chairman and ceo bill mcnabb with the best ways to protect your money is a "halftime" exclusive coming up next. plus stick around for a "halftime" debate, it's a global growth play that's been stuck in

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our next guest calls the fiscal cliff the biggest threat to your money and his view has a lot of cash behind it. he's van guards ceo bill mcnabb. vanguard's got $2 trillion in assets under management and he joins us now in a cnbc exclusive. mr. mcnabb, great to have you on the show. thanks so much for coming on "halftime." >> thank you for having me. >> so what's your outlook for the market given the fiscal cliff? seems as though the ball may be moving forward a bit based on a meeting between the speaker and the president today. >> you know, there's certainly a lot, seems to be a lot of positive momentum, and clearly the market is assuming

something's going to get done, at least in the short run. >> so what does that mean to the many, many, many people who own some of your products? they're clearly wondering what the markets are going to have in store not only for the remainder of this year but certainly into 2013 and for the longer term as you guys look out many years in your investing style. >> yeah, so i think that's actually a really good point and actually for us, when we look at the fiscal cliff, in a sense it's a symptom of a much larger issue, and you know the larger issue is the deficit situation. and if you look at how this has evolved. two years ago when the first of the bipartisan commissions came out with some recommendations, not too many people paid attention but during the campaign it was really one of the central themes. certainly as we're seeing the fiscal cliff discussions play out, you know, one of the things that certainly is front and center is can you link a fix to the fiscal cliff, to a longer-term deficit reduction

bill or series of activities. >> bill, it's josh. you know, first let me congratulate you, business week magazine called 2012 the year of vanguard the other day and looking at the fund close that's clearly the case. do you think that is an improving psychological environment where markets tend to be a little bit less volatile and stocks start to separate from each other? does that change anything about the fundamental idea of indexing and passive versus active? do you think that people are going to go through more stock picking as they have in the past in better markets, or has the mind-set changed permanently? what would be your take on that? >> yeah, so, look you're going to have cycles where active and passive, you know, each one looks relatively good versus the other. but, you know, the real fundamental issue that's going on here is, i think there's been a recognition that the cost of investing is actually one of the big predictors of future performance. so if you're an active manager

and you're really expensive, it's that much harder to overcome that barrier, and so i think what you've seen this year and you're going to continue to see it is a real emphasis on cost. i fully expect there will be active managers who will be very successful going forward but i think you'll see their prices come down a little bit. >> do you have a feeling that investors are going to start feeling better about the market? i mean, if you look at the major averages you've got the dow at 13,2 hupd. 9sen is above 1,400. you take a look at facebook, a disastrous ipo which maybe hurt psychology in a large amount has rebounded, the stock's doing better. apple is going through issues but the stock is still among the most highly owned and favored on wall street. where would you score investor confidence right now? >> i think investor confidence is definitely improving. and i think there is a lot of assumptions that we are going to not only navigate this short-term cliff situation, but we're going to put a longer-term fix in.

now, if you sort of go back to the summer of 2011, and in august in particular, you know, you really saw the effects of the uncertainty around u.s. debt situation. and i think one of the things we'd really like to see is a fiscal cliff deal that's linked to a binding timetable to get a locker-term fix. and you know the interesting thing from my perspective is the longer-term fix doesn't need to, you know, make immediate progress. but, what we'd like to see is something on the order of, you know, we call it 2020 by 2020, which,you know, get your revenues to 20% in gdp, get your expenditures down to 20% of gdp, and do that all in the next seven or eight years and i think if there's a plan to do that, i actually think there's an awful lot of money sitting on the side lines that might flow back into equities. >> we've asked the great jack vogel for his opinion on a comment that bill gross made several months back where he

said, and i'm sure you're familiar with it, that the cult of equity was dying. i'd love to get your opinion on that, as well. the premise being that we're all going to have to get used to more real returns or lower number of real returns for the markets going forward. not only for stocks but bonds going forward, as well. your take on that is what? on the bond side i think it's almost a mathematical certainty. so if you look at, just before i came on, you all were talking about the yield on ten-year treasuries, so take a ten-year yield on corporate bonds, somewhere around 2%, and your yield to that yourty is your best predictor of future return. that's likely what you're going to see over the next decade in bonds. we think equities are actually at a reasonable valuation, and if you can remove some of the uncertainty from the macro economic side, you know, by getting a longer-term deal in place, i don't see any reason why equities can't revert to a

reasonable, close to long-term average, so somewhere in that 7% to 9% range over the next decade. >> in other words buy stocks for the long term and hold them. is that what you're saying? >> yeah, you know, i think again with all due respect, i think the idea that equity returns are going to be really very minuscule over the next decade, we have a very different take on it. >> all right. well it's great to get that take from you, sir. bill mcnabb, appreciate it very much. look forward to having you back on "halftime" sometime soon. >> thank you very much for having me. >> sometimes it's sell the winners. first up bank of america having its best day since july 2011. it's up more than 108% over the past year. weiss? >> i still own it. i bought a little more last week. to me, bank stocks still very, very cheap. i am looking for yields to back up which means that they'll make

more money for on interest margin. here's the other issue. you have banks get healthy around the world from what we did here. so i say continue to buy them. housing helps. everything helps. >> stephanie links, financials are ripping today, that's why the market is in large part doing what he's doing. >> housing continues to be the one great theme here in the united states. lending is improving and i think people are starting to anticipate that host of new stress tests that you're going to see more cash distribution. whereas bank of america is still very cheap, trading below book and i think they do have some momentum happening at the company. we prefer goldman sachs, not up nearly as much and trades below tangible book as well. >> josh, at what point does a smart trader look at 108% gain and say i don't care what i think about this company, how high i think it can go, i got to take something off of this thing. >> on b.a.c. it probably comes off. i think the shareholder base here, there's definitely an element of traders but i think a lot of people are willing to make that fully year beat h bet that this is a company that fell

on hard times and is now improving. the stress test could serve as a very positive catalyst here, too. i don't know -- >> i think this is all about the return to normalized earnings, and many analysts and many traders expected that return to come in 2014. i think it's coming much quicker than anticipated for reasons everyone cited. i think financials are going to be a course of opportunity. >> next up is yahoo! the stock is trading at a four yoosh der high soaring 31% over the past year. j.b., back to you. >> so on a short-term basis this is obviously a stock that's had a huge move. up 34%. that being said there weren't going to be a lot of content winners on the web at this size. but yahoo! is going to be one of them. 640 million uniques, about a third of revenue comes from search. i think you want to take the chart back to a weekly or a monthly. this thing is about to shatter the upper end of a five-year trading range. quite frankly, marissa mayer is getting the benefit of the doubt more times than not.

>> you think? >> so i think the stock is for that reason technically speaking if it can't break out of that level, this would be mid 20s and nothing much has to change in the company. that being said there are some fundamental improvements that are already afoot. >> people were dumping all over this stock. you couldn't find anything to say anything positive about it, marissa mayer gets the job and -- >> -- media company. this is brilliant advertising business and by the way, one of the best efforts of the year aside from yahoo! has been media. they're all at 53-week highs. there's no reason why this one wouldn't be treated the same so long as fundamentals ceased to deteriorate. >> people are going out of their way to find positives on a stock that they couldn't find any positives -- >> valued correctly for the first time in years because people are not looking at inseptember management >> she's got another quart ef of the halo effect. >> but the asset base of this company is substantial.

the market didn't care so long as the previous manager was running it. now they're willing to take another look and say between asia, between display, between search there's something here worth more than 16. >> clearly the street believes it. coming up on "halftime" as china improves is caterpillar the next stock to surge? one big battle is next. one of our traders is in the hot seat but he'll show you what the next move is. [ male announcer ] when gloria and her financial advisor made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us. wells fargo advisors.

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coming up at the top of the hour on "power lunch" what's next for bonds? we will explore the risks, the rewards and find out what to do now from the co-chief investment officer of the mutual fund power house janus. strong sales of iphone 5 in china so are fears about apple overblown? and president obama says he will use whatever power he has to prevent another massacre like the one in newtown, connecticut. we focus on solutions today on power lunch. now back to scott. >> all right, tyler, thanks so much. caterpillar has struggled to gain momentum this year. the stock is down about 2%, underperforming the market but with china picking up steam is the stock ready to break out? joe terranova says it's time to get bullish, weiss sees headwinds ahead. let's debate it here. what's the problem with caterpillar? shouldn't the stock start rising? >> china's also getting more competitive.

and you've got two thirds of cat is in nonmining, but the interesting thing is the third that is in mining, those margins are twice as high as they're average, so with all the cuts in production, lower the numbers for next year you're going to see more pressure on that. dirkly in the construction market it's also more competitive. san francisco, just announced $1.7 project in san fran that's funded by china development bank. guess who's bringing the equipment? my bet is it's going to be the chinese equipment manufacturers. so there's margins from mining coming down. there's pressure on margins from cost competitors. i just think it is a great story and i think street estimates are way too high. >> why is it going to change now? >> there's an interesting point where street estimates are way too high. and i think street estimates were way too high when the stock was trading 78 back in july and the average price target was 130. now estimates have come down and i think what you're buying here

is the 2013 potential because all these known head winds are out there. now you talk about your chinese sales, as a percentage, is only 3% for caterpillar. so the story that i'm looking at is not caterpillar in china. it is the ability to have and execute on cost management. 20 to 25% of their work force is temporary workers. they can can make adjustments as needed. you talk about domestically here in north america and they are gaining significant market share. they're just crushing deer. they have 600 point in market share and additionally look down in south america, which has been weak. sales down 1%, pulling way away from kamatsu. i want to look at what they are doing in north america and say, there is a dramatic spring back -- >> i want to take this right to stephanie link.

steph, who made the favorable market here? >> well, we own it so i would say what joe would say. last quarter speaks to this company on cost and getting pricing where they can. comins just raised prices on pow g /* power gen equipment today. now at 88, $89, we were buying in low 80s. should they lower those numbers, those numbers are the trough and that's when you buy. >> i don't love cat the stock, i love cat the company. but i've got say, if the overall market makes a big move higher and there a global growth margin, steve may be right on benefiting deals. i think i have to go with joe even though i respect steve's research on the name because he does make some important point there. >> all right. case is closed on cat. coming up on halftime, our

traders aren't always right. er with learning from a trading mistakes next. and there is a lot of news toe trade and we have that store you as well when we come back. is let's give thanks - for an idea. a grand idea called america. the idea that if you work hard, if you have a dream, if you work with your neighbors... you can do most anything. this led to other ideas like liberty and rock 'n' roll. to free markets, free enterprise, and free refills. it put a man on the moon and a phone in your pocket. our country's gone through a lot over the centuries and a half. but this idea isn't fragile. when times get tough, it rallies us as one.

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. not so fast, our traders are quick but not always right. in the past month, our own joe tar nova made plays on dick's sporting goods.

let's take a listen. >> dks, i bought that today. i like the margin at 31%. >> dks has been a favorite of mine. it is about the trend, footware, apparel and about the american consumer stepping out. exercising more. this is a stock in my estimation trading in low 50s moves to upper 50s. >> not so fast. >> stock is down about 11% since that call. >> bottom line. i got stopped out. which you know what that means, stocks going back up. >> how about stocks to stop me on. how about macy's. >> we're back in a moment. [ male announcer ] this is steve.

he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade.

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move from ambition to achievement. and the next great idea could be yours. ♪ can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. time now for final trades and stephanie, you are up first. >> i like schlumberger. i do not think this is company specific. i think you w